-----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, B0QGwYSVm14h/6DJjojDEjkj1ZMDn3Ucbw+p69ulVvkXKDnZ5tZaP9YGWBQpLT0p Bc5+Q0GX6McuNC3FJOu9xw== /in/edgar/work/20000825/0000936772-00-000251/0000936772-00-000251.txt : 20000922 0000936772-00-000251.hdr.sgml : 20000922 ACCESSION NUMBER: 0000936772-00-000251 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000825 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: 710283 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 GROWTH PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2000 (UNAUDITED) Investment Products Offered O Are Not FDIC Insured O May Lose Value O Are Not Bank Guaranteed GROWTH PORTFOLIO TEN LARGEST HOLDINGS June 30, 2000 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ U.S. $ PERCENT OF COMPANY VALUE NET ASSETS - ------------------------------------------------------------------------------- Vodafone AirTouch Group Plc $ 34,080,790 7.3% Nextel Communications, Inc., Cl.A 27,167,250 5.8 Sanmina Corp. 20,032,650 4.3 AT&T Corp. - Liberty Media Group, Cl.A 17,890,583 3.8 U S WEST, Inc. 15,229,200 3.3 Sprint Corp. 13,872,000 3.0 American International Group, Inc. 13,165,405 2.8 Ceridian Corp. 12,964,875 2.8 Citigroup, Inc. 11,959,504 2.6 The CIT Group, Inc., Cl.A 11,358,100 2.4 $177,720,357 38.1% 1 GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ Shares or Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- COMMON & PREFERRED STOCKS-97.7% TECHNOLOGY-45.5% COMMUNICATIONS EQUIPMENT-0.3% Loral Space & Communications (a) 215,800 $ 1,497,113 COMMUNICATION SERVICES-11.1% ALLTEL Corp. 34,000 2,105,875 Cable & Wireless Plc (United Kingdom) 81,000 1,371,458 Global TeleSystems Group, Inc. (a) 252,428 3,044,913 Nextel Communications, Inc. Cl.A (a) 444,000 27,167,250 Nextlink Communications, Inc. cv. pfd. 6,000 1,032,750 Sprint Corp. 272,000 13,872,000 VoiceStream Wireless Corp. (a) 27,200 3,163,275 ------------ 51,757,521 COMPUTER HARDWARE-1.7% Compaq Computer Corp. 81,000 2,070,562 International Business Machines Corp. 52,000 5,697,250 ------------ 7,767,812 COMPUTER SERVICES-2.8% Ceridian Corp. (a) 538,800 12,964,875 COMPUTER SOFTWARE & SERVICES-2.2% Computer Associates International, Inc. 204,063 10,445,475 ELECTRONICS-3.3% Flextronics International, Ltd. (Singapore) (a) 109,800 7,541,887 SCI Systems, Inc. (a) 198,800 7,790,475 ------------ 15,332,362 SEMI-CONDUCTOR COMPONENTS-4.1% Applied Materials, Inc. (a) 56,000 5,075,000 Intel Corp. 38,000 5,080,125 Micron Technology, Inc. (a) 102,000 8,982,375 ------------ 19,137,500 TELECOMMUNICATIONS-14.7% Colt Telecom Group Plc (ADR) (United Kingdom) (a) 8,300 1,125,688 Energis Plc (United Kingdom) (a) 72,000 2,699,612 Equant NV (Netherlands) (a) 23,000 989,000 FLAG Telecom Holdings, Ltd. (a) 41,000 609,875 Intermedia Communications, Inc. (a) 744 22,134 cv. pfd. 18,000 677,250 Millicom International Cellular, SA (Luxembourg) (a) 90,300 3,160,500 Nokia Corp. (ADR) (Finland) 54,000 2,696,625 NTL, Inc. (a) 153,000 9,160,875 Qwest Communications International, Inc. (a) 30,000 1,490,625 Vodafone AirTouch Group Plc (ADR) (United Kingdom) 8,435,889 34,080,790 Western Wireless Corp. Cl.A 24,000 1,308,000 WorldCom, Inc. (a) 234,926 10,777,230 ------------ 68,798,204 MISCELLANEOUS-5.3% Sanmina Corp. (a) 234,300 20,032,650 Solectron Corp. (a) 111,000 4,648,125 ------------ 24,680,775 ------------ 212,381,637 FINANCE-22.4% BANKING - MONEY CENTERS-1.7% Chase Manhattan Corp. 167,910 7,734,354 BANKING - REGIONAL-4.4% Bank One Corp. 41,000 1,089,063 BankAmerica Corp. 186,600 8,023,800 The CIT Group, Inc. Cl.A 698,960 11,358,100 ------------ 20,470,963 INSURANCE-5.3% Ace, Ltd. 41,200 1,153,600 AFLAC, Inc. 65,000 2,985,937 American International Group, Inc. 112,046 13,165,405 John Hancock Financial Services, Inc. (a) 235,200 5,571,300 Metlife, Inc. (a) 88,000 1,853,500 ------------ 24,729,742 REAL ESTATE-1.3% Entertainment Properties Trust 56,000 773,500 Humphrey Hospitality Trust, Inc. 99,100 786,606 JP Realty, Inc. 149,800 2,668,313 Koger Equity, Inc. 100,000 1,687,500 ------------ 5,915,919 MISCELLANEOUS-9.7% Associates First Capital Corp. Cl.A 475,000 10,598,438 Citigroup, Inc. 198,498 11,959,504 2 GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) Alliance Variable Products Series Fund _______________________________________________________________________________ Shares or Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Household International, Inc. 118,000 $ 4,904,375 MBNA Corp. 381,975 10,361,072 Providian Financial Corp. 85,000 7,650,000 ------------ 45,473,389 ------------ 104,324,367 CONSUMER SERVICES-9.8% AIRLINES-0.9% Continental Airlines, Inc. Cl.B (a) 90,300 4,244,100 BROADCASTING & CABLE-5.3% AT&T Corp. - Liberty Media Group Cl.A (a) 737,756 17,890,583 Charter Communications, Inc. Cl.A (a) 89,000 1,462,938 Comcast Corp. Cl.A 35,000 1,417,500 Viacom, Inc. Cl.B (a) 59,224 4,038,336 ------------ 24,809,357 BUSINESS SERVICES-0.8% Cendant Corp. (a) 266,338 3,728,732 ENTERTAINMENT & LEISURE-0.8% Carnival Corp. Cl.A 47,000 916,500 MGM Grand, Inc. (a) 85,000 2,730,625 ------------ 3,647,125 RETAIL - GENERAL MERCHANDISE-2.0% Circuit City Stores-Circuit City Group 15,000 497,812 Home Depot, Inc. 80,450 4,017,472 RadioShack Corp. 100,000 4,737,500 ------------ 9,252,784 ------------ 45,682,098 UTILITY-5.5% TELEPHONE-5.5% AT&T Wireless Group (a) 376,000 10,481,000 U S WEST, Inc. 177,600 15,229,200 ------------ 25,710,200 HEALTH CARE-5.0% DRUGS-4.6% Bristol-Myers Squibb Co. 98,000 5,708,500 IMS Health, Inc. 409,000 7,362,000 Merck & Co., Inc. 61,800 4,735,425 Schering-Plough Corp. 69,000 3,484,500 SICOR, Inc. (a)(b) 8,000 244,000 ------------ 21,534,425 MEDICAL PRODUCTS-0.4% Boston Scientific Corp. (a) 78,000 1,711,125 ------------ 23,245,550 BUSINESS SERVICES-4.2% BROADCASTING-2.3% Adelphia Communications Corp. Cl.A (a) 102,000 4,781,250 cv. pfd. 4,000 573,000 UnitedGlobalCom, Inc. Cl.A (a) 115,400 5,394,950 ------------ 10,749,200 BROADCASTING & CABLE-1.1% MediaOne Group, Inc. (a) 80,000 5,305,100 PRINTING, PUBLISHING & BROADCASTING-0.8% Cablevision Systems Corp. Cl.A (a) 35,000 2,375,625 Gannett Co., Inc. 18,000 1,076,625 ------------ 3,452,250 ------------ 19,506,550 ENERGY-2.6% OIL & GAS SERVICES-2.5% BP Amoco (ADR) (United Kingdom) 957,896 9,189,146 Santa Fe International Corp. 70,000 2,445,625 ------------ 11,634,771 OIL SERVICES-0.1% Total Fina, SA (ADR) (France) 3,000 230,438 ------------ 11,865,209 MULTI-INDUSTRY COMPANIES-1.8% Tyco International, Ltd. 181,144 8,581,697 CONSUMER STAPLES-0.6% RETAIL - FOOD & DRUGS-0.6% Kroger Co. (a) 136,000 3,000,500 AEROSPACE & DEFENSE-0.3% AEROSPACE-0.3% General Motors Corp. Cl.H (a) 18,000 1,579,500 Total Common & Preferred Stocks (cost $331,901,887) 455,877,308 LONG-TERM DEBT SECURITY-0.5% COMMUNICATIONS EQUIPMENT-0.5% Global TeleSystems Group, Inc. 5.75%, 7/01/10 (cost $2,940,282) $ 3,735 2,147,625 3 Alliance Variable Products Series Fund _______________________________________________________________________________ Shares or Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS-2.4% U.S. GOVERNMENT AGENCY-2.2% Federal Home Loan Bank 6.48%, 7/03/00 $10,400 $ 10,396,256 TIME DEPOSIT-0.2% State Street Euro Dollar 6.00%, 7/03/00 609 609,000 Total Short-Term Investments (amortized cost $11,005,256) 11,005,256 TOTAL INVESTMENTS-100.6% (cost $345,847,425) 469,030,189 Other assets less liabilities-(0.6%) (2,595,836) NET ASSETS-100% $466,434,353 (a) Non-income producing security. (b) 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 $244,000 or 0.1% of net assets. Glossary: ADR - American Depositary Receipt See Notes to Financial Statements. 4 GROWTH PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2000 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $345,847,425) $469,030,189 Cash 226 Receivable for investment securities sold 612,460 Dividends and interest receivable 398,795 Total assets 470,041,670 LIABILITIES Payable for investment securities purchased 3,235,901 Advisory fee payable 288,548 Accrued expenses 82,868 Total liabilities 3,607,317 NET ASSETS $466,434,353 COMPOSITION OF NET ASSETS Capital stock, at par 15,598 Additional paid-in capital 307,586,831 Undistributed net investment income 421,845 Accumulated net realized gain on investments and foreign currency transactions 35,222,062 Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 123,188,017 $466,434,353 Class A Shares Net assets $447,877,659 Shares of capital stock outstanding 14,976,237 Net asset value per share $ 29.91 Class B Shares Net assets $ 18,556,694 Shares of capital stock outstanding 622,134 Net asset value per share $ 29.83 See Notes to Financial Statements. 5 GROWTH PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2000 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign tax withheld of $18,872) $ 1,621,164 Interest 535,873 Total investment income 2,157,037 EXPENSES Advisory fee 1,707,112 Distribution fee - Class B 11,454 Custodian 52,117 Administrative 31,500 Audit and legal 21,582 Printing 10,044 Directors' fees 664 Transfer agency 506 Miscellaneous 3,486 Total expenses 1,838,465 Net investment income 318,572 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized gain on investment transactions 35,352,146 Net realized loss on foreign currency transactions (33,492) Net change in unrealized appreciation/depreciation of: Investments (43,791,046) Foreign currency denominated assets and liabilities 5,587 Net loss on investments and foreign currency transactions (8,466,805) NET DECREASE IN NET ASSETS FROM OPERATIONS $(8,148,233) See Notes to Financial Statements. 6 GROWTH 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 $ 318,572 $ 435,539 Net realized gain on investments and foreign currency transactions 35,318,654 44,951,316 Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities (43,785,459) 71,614,157 Net increase (decrease) in net assets from operations (8,148,233) 117,001,012 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A (301,829) (1,078,120) Class B (5,174) -0- Net realized gain on investments Class A (43,806,324) (28,188,611) Class B (1,270,971) -0- CAPITAL STOCK TRANSACTIONS Net increase 58,233,167 45,317,991 Total increase 4,700,636 133,052,272 NET ASSETS Beginning of period 461,733,717 328,681,445 End of period (including undistributed net investment income of $421,845 and $410,276, respectively) $466,434,353 $461,733,717 See Notes to Financial Statements. 7 GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ NOTE A: Significant Accounting Policies The Growth Portfolio (the "Portfolio") is a series of Alliance Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek to provide long-term growth of capital. Current income is incidental to the Portfolio's objective. 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 GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) 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. Pursuant to the advisory agreement, the Portfolio paid $31,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2000. 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 no such waivers/reimbursements. Brokerage commissions paid on investment transactions for the six months ended June 30, 2000, amounted to $247,061, 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, and of which $8,030 was paid 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 Distribu 9 Alliance Variable Products Series Fund _______________________________________________________________________________ tor under the Plans is to compensate the Distributor for 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 $146,984,414 U.S. government and agencies -0- Sales: Stocks and debt obligations $135,185,435 U.S. government and agencies -0- 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 $154,903,473 Gross unrealized depreciation (31,720,709) Net unrealized appreciation $123,182,764 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. At June 30, 2000, the Portfolio had no outstanding forward exchange currency contracts. 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 10 GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund _______________________________________________________________________________ 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. 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 467,432 2,994,264 $ 48,453,323 $ 85,831,721 Shares issued in reinvestment of dividends and distributions 1,426,064 1,101,081 44,108,153 29,266,731 Shares redeemed (1,494,934) (2,579,730) (48,592,392) (74,650,826) Net increase 1,398,562 1,515,615 $ 43,969,084 $ 40,447,626 Six Months June 1, 1999* Six Months June 1, 1999* Ended to Ended to June 30, 2000 December 31, June 30, 2000 December 31, (unaudited) 1999 (unaudited) 1999 ------------ ------------ -------------- -------------- Class B Shares sold 435,772 172,661 $13,797,819 $4,938,843 Shares issued in reinvestment of dividends and distributions 41,366 -0- 1,276,145 -0- Shares redeemed (25,156) (2,509) (809,881) (68,478) Net increase 451,982 170,152 $14,264,083 $4,870,365 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. * Commencement of distribution. 11 Alliance Variable Products Series Fund _______________________________________________________________________________ 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 GROWTH 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 June 30, 2000 Year Ended December 31, (unaudited) 1999 1998 1997 1996 1995 ------------- ----------- ----------- ----------- ----------- -------- Net asset value, beginning of period $33.59 $27.25 $22.42 $17.92 $14.23 $10.53 Income From Investment Operations Net investment income (a) .02 .03 .10 .07 .06(b) .17(b) Net realized and unrealized gain (loss) on investments and foreign currency transactions (.49) 8.73 6.19 5.18 3.95 3.54 Net increase (decrease) in net asset value from operations (.47) 8.76 6.29 5.25 4.01 3.71 Less: Dividends and Distributions Dividends from net investment income (.02) (.09) (.06) (.03) (.04) (.01) Distributions from net realized gains (3.19) (2.33) (1.40) (.72) (.28) -0- Total dividends and distributions (3.21) (2.42) (1.46) (.75) (.32) (.01) Net asset value, end of period $29.91 $33.59 $27.25 $22.42 $17.92 $14.23 Total Return Total investment return based on net asset value (c) (1.70)% 34.47% 28.73% 30.02% 28.49% 35.23% Ratios/Supplemental Data Net assets, end of period (000's omitted) $447,878 $456,027 $328,681 $235,875 $138,688 $45,220 Ratios to average net assets of: Expenses, net of waivers and reimbursements .80%(d) .84% .87% .84% .93% .95% Expenses, before waivers and reimbursements .80%(d) .84% .87% .84% .93% 1.27% Net investment income .14%(d) .12% .43% .37% .35%(b) 1.31%(b) Portfolio turnover rate 30% 54% 62% 62% 98% 86%
See footnote summary on page 14. 13 Alliance Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS B ----------------------------------- Six Months June 1, 1999(e) Ended to June 30, 2000 December 31, (unaudited) 1999 ---------------- --------------- Net asset value, beginning of period $33.54 $26.83 Income From Investment Operations Net investment loss (a) (.01) (.03) Net realized and unrealized gain (loss) on investment and foreign currency transactions (.50) 6.74 Net increase (decrease) in net asset value from operations (.51) 6.71 Less: Dividends and Distributions Dividends from net investment income (.01) -0- Distributions from net realized gains (3.19) -0- Total dividends and distributions (3.20) -0- Net asset value, end of period $29.83 $33.54 Total Return Total investment return based on net asset value (c) (1.82)% 25.01% Ratios/Supplemental Data Net assets, end of period (000's omitted) $18,557 $5,707 Ratios to average net assets of: Expenses (d) 1.06% 1.12% Net investment loss (d) (.10)% (.20)% Portfolio turnover rate 30% 54% (a) Based on average shares outstanding. (b) Net of expenses reimbursed or waived by the Adviser. (c) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. (d) Annualized. (e) Commencement of distribution. 14 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. 15 -----END PRIVACY-ENHANCED MESSAGE-----