N-30D 1 edg6676.txt VARP - AB VALUE PORTFOLIO ALLIANCE ------------------------- VARIABLE PRODUCTS ------------------------- SERIES FUND ------------------------- ALLIANCEBERNSTEIN VALUE ------------------------- PORTFOLIO ------------------------- SEMI-ANNUAL REPORT JUNE 30, 2001 Investment Products Offered --------------------------- > Are Not FDIC Insured > May Lose Value > Are Not Bank Guaranteed --------------------------- ALLIANCEBERNSTEIN VALUE PORTFOLIO TEN LARGEST HOLDINGS June 30, 2001 (unaudited) Alliance Variable Products Series Fund ================================================================================ COMPANY U.S. $ VALUE PERCENT OF NET ASSETS -------------------------------------------------------------------------------- Exxon Mobil Corp. $ 174,700 4.8% -------------------------------------------------------------------------------- Citigroup, Inc. 137,384 3.8 -------------------------------------------------------------------------------- Verizon Communications 88,275 2.4 -------------------------------------------------------------------------------- Bank of America Corp. 79,540 2.2 -------------------------------------------------------------------------------- Federal National Mortgage Assn. 68,120 1.9 -------------------------------------------------------------------------------- SBC Communications, Inc. 66,099 1.8 -------------------------------------------------------------------------------- Philip Morris Cos., Inc. 60,900 1.7 -------------------------------------------------------------------------------- Chevron Corp. 54,300 1.5 -------------------------------------------------------------------------------- E.I. du Pont de Nemours & Co. 47,034 1.3 -------------------------------------------------------------------------------- U.S. Bancorp 44,440 1.2 -------------------------------------------------------------------------------- $ 820,792 22.6% -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2001 (unaudited) Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value -------------------------------------------------------------------------------- COMMON STOCKS-89.1% FINANCIAL-31.1% BANKS-NYC-4.9% Bank of New York Co., Inc. .................... 25 $ 1,200 Citigroup, Inc. ............................... 2,600 137,384 J.P. Morgan Chase & Co. ....................... 900 40,140 ---------- 178,724 ---------- FINANCE-PERSONAL LOANS-0.9% American Express Co. .......................... 350 13,580 Countrywide Credit Industries, Inc ............ 450 20,646 ---------- 34,226 ---------- LIFE INSURANCE-1.0% MetLife, Inc. ................................. 700 21,686 Torchmark, Inc. ............................... 325 13,068 ---------- 34,754 ---------- MAJOR REGIONAL BANKS-13.5% AmSouth Bancorp ............................... 1,100 20,339 Bank of America Corp. ......................... 1,325 79,540 Bank One Corp. ................................ 1,200 42,960 Charter One Financial, Inc. ................... 650 20,735 Comerica, Inc. ................................ 200 11,520 First Union Corp. ............................. 1,150 40,181 FleetBoston Financial Corp. ................... 1,100 43,395 KeyCorp ....................................... 900 23,445 National City Corp. ........................... 1,000 26,163 Regions Financial Corp. ....................... 650 20,800 SouthTrust Corp. .............................. 400 10,400 Suntrust Banks, Inc. .......................... 300 12,956 U.S. Bancorp .................................. 1,950 44,440 Union Planters Corp. .......................... 475 20,710 UnionBanCal Corp. ............................. 500 16,850 Wachovia Corp. ................................ 400 23,124 Wells Fargo & Co. ............................. 675 31,340 ---------- 488,898 ---------- MISCELLANEOUS FINANCIAL-2.2% Goldman Sachs Group, Inc. ..................... 75 6,435 Lehman Brothers Holdings, Inc. ................ 400 27,213 Merrill Lynch & Co., Inc. ..................... 375 22,219 Morgan Stanley, Dean Witter & Co. ............. 375 24,086 ---------- 79,953 ---------- MULTI-LINE INSURANCE-1.7% Aetna, Inc. (a) ............................... 700 18,109 American International Group, Inc. ............ 225 19,350 CIGNA Corp. ................................... 250 23,955 ---------- 61,414 ---------- PROPERTY-CASUALTY INSURANCE-2.7% Allstate Corp. ................................ 350 15,396 Aon Corp. ..................................... 600 21,000 Chubb Corp. ................................... 300 23,229 St. Paul Cos., Inc. ........................... 400 20,276 XL Capital, Ltd. Cl.A ......................... 200 16,420 ---------- 96,321 ---------- SAVINGS AND LOAN-4.2% Federal Home Loan Mortgage Corp ............... 350 24,500 Federal National Mortgage Assn. ............... 800 68,120 Golden West Financial Corp. ................... 350 22,484 Washington Mutual, Inc. ....................... 1,000 37,550 ---------- 152,654 ---------- 1,126,944 ---------- ENERGY-10.2% OILS-INTEGRATED DOMESTIC-2.8% Amerada Hess Corp. ............................ 250 20,200 Ashland, Inc. ................................. 450 18,045 Phillips Petroleum Co. ........................ 425 24,225 Sunoco, Inc. .................................. 500 18,315 Unocal Corp. .................................. 600 20,490 ---------- 101,275 ---------- OILS-INTEGRATED INTERNATIONAL-7.1% Chevron Corp. ................................. 600 54,300 Conoco, Inc. Cl.A ............................. 600 16,920 Exxon Mobil Corp. ............................. 2,050 174,700 Texaco, Inc. .................................. 175 11,655 ---------- 257,575 ---------- OIL WELL EQUIPMENT & SERVICES-0.3% Nabors Industries, Inc. (a) ................... 450 13,020 ---------- 371,870 ---------- UTILITIES-9.7% ELECTRIC COMPANIES-3.2% Alliant Energy Corp. .......................... 150 4,373 Ameren Corp. .................................. 450 19,215 American Electric Power Co., Inc .............. 550 25,393 Cinergy Corp. ................................. 600 20,970 Consolidated Edison, Inc. ..................... 550 21,890 Xcel Energy, Inc. ............................. 800 22,760 ---------- 114,601 ---------- 2 Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value -------------------------------------------------------------------------------- TELEPHONE-6.5% AT&T Corp. .................................... 1,400 $ 26,400 BellSouth Corp. ............................... 700 28,189 SBC Communications, Inc. ...................... 1,650 66,099 Verizon Communications ........................ 1,950 88,275 WorldCom, Inc. ................................ 2,900 28,400 -------- 237,363 -------- 351,964 -------- COMMODITIES-9.0% CHEMICALS-4.8% Cabot Corp. ................................... 500 18,010 E.I. du Pont de Nemours & Co. ................. 1,075 47,034 Eastman Chemical Co. .......................... 400 19,052 Great Lakes Chemical Corp. .................... 400 12,340 Hercules, Inc. ................................ 900 10,170 Praxair, Inc. ................................. 475 22,325 The Dow Chemical Co. .......................... 1,000 33,250 The Lubrizol Corp. ............................ 400 12,420 -------- 174,601 -------- PAPER-3.8% Boise Cascade Corp. ........................... 450 15,827 Georgia-Pacific Group ......................... 600 20,310 International Paper Co. ....................... 750 26,775 Mead Corp. .................................... 650 17,641 Potlatch Corp. ................................ 50 1,721 Smurfit-Stone Container Corp. (a) ............. 1,150 18,630 Temple-Inland, Inc. ........................... 350 18,651 Westvaco Corp. ................................ 700 17,003 -------- 136,558 -------- STEEL-0.4% Nucor Corp. ................................... 450 15,889 -------- 327,048 -------- CONSUMER CYCLICALS-8.1% AUTOS & AUTO PARTS-2.0% Autoliv, Inc. (Sweden) ........................ 550 9,504 Delphi Automotive Systems Corp ................ 1,550 20,709 Ford Motor Co. ................................ 450 11,047 General Motors Corp. .......................... 75 4,826 Johnson Controls, Inc. ........................ 300 21,741 Snap On, Inc. ................................. 225 5,436 -------- 73,263 -------- HOME FURNISHINGS-0.6% Leggett & Platt, Inc. ......................... 900 19,827 -------- HOTEL-MOTEL-0.1% Hilton Hotels Corp. ........................... 400 4,640 -------- HOUSEHOLD-APPLIANCES/DURABLES-1.1% Black & Decker Corp. .......................... 500 19,730 Whirlpool Corp. ............................... 300 18,750 -------- 38,480 -------- MISCELLANEOUS CONSUMER CYCLICALS-1.1% Fortune Brands, Inc. .......................... 550 21,098 Newell Rubbermaid, Inc. ....................... 800 20,080 -------- 41,178 -------- RETAILERS-1.7% May Department Stores Co. ..................... 650 22,269 Sears, Roebuck & Co. .......................... 550 23,270 TJX Cos, Inc. ................................. 600 14,342 -------- 59,881 -------- TEXTILES/SHOES-APPAREL MFG.-1.0% Liz Claiborne, Inc. ........................... 375 18,919 V. F. Corp. ................................... 500 18,190 -------- 37,109 -------- TIRES & RUBBER GOODS-0.5% Goodyear Tire & Rubber Co. .................... 650 18,200 -------- 292,578 -------- CONSUMER STAPLES-6.3% BEVERAGES-SOFT, LITE & HARD-1.1% Coca-Cola Enterprises, Inc. ................... 1,100 17,985 Pepsi Bottling Group, Inc. .................... 450 18,045 PepsiCo, Inc. ................................. 75 3,315 -------- 39,345 -------- FOODS-1.3% ConAgra Foods, Inc. ........................... 700 13,867 H.J. Heinz Co. ................................ 275 11,245 IBP, Inc. ..................................... 400 10,100 Kellogg Co. ................................... 175 5,075 Tyson Foods, Inc. Cl.A ........................ 700 6,447 -------- 46,734 -------- MISCELLANEOUS STAPLES-0.1% Energizer Holdings, Inc. (a) .................. 200 4,590 -------- RESTAURANTS-0.8% McDonald's Corp. .............................. 200 5,412 Tricon Global Restaurants, Inc. (a) ........... 500 21,950 -------- 27,362 -------- RETAIL STORES-FOOD-0.2% SUPERVALU, Inc. ............................... 500 8,775 -------- 3 ALLIANCEBERNSTEIN VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value -------------------------------------------------------------------------------- SOAPS-0.6% Procter & Gamble Co. .......................... 350 $ 22,330 ---------- SUGAR REFINERS-0.5% Archer-Daniels-Midland Co. .................... 1,450 18,850 ---------- TOBACCO-1.7% Philip Morris Cos., Inc. ...................... 1,200 60,900 ---------- 228,886 ---------- CAPITAL EQUIPMENT-5.4% AEROSPACE-DEFENSE-1.4% B.F. Goodrich Corp. ........................... 500 18,990 Boeing Co. .................................... 575 31,970 ---------- 50,960 ---------- AUTO TRUCKS-PARTS-0.8% Cummins Engine Co., Inc. ...................... 75 2,903 Dana Corp. .................................... 400 9,336 PACCAR, Inc. .................................. 350 17,997 ---------- 30,236 ---------- DEFENSE-1.2% Lockheed Martin Corp. ......................... 650 24,082 Raytheon Co. (a) .............................. 900 19,913 ---------- 43,995 ---------- ELECTRICAL EQUIPMENT-1.2% Cooper Industries, Inc. ....................... 450 17,815 General Electric Co. .......................... 25 1,219 Hubbell, Inc. Cl.B ............................ 400 11,600 Thomas & Betts Corp. .......................... 500 11,035 ---------- 41,669 ---------- MACHINERY-0.2% Briggs & Stratton Corp. ....................... 150 6,315 ---------- MISCELLANEOUS CAPITAL GOODS-0.6% Minnesota Mining and Manufacturing Co. ........ 30 3,423 Parker-Hannifin Corp. ......................... 450 19,098 ---------- 22,521 ---------- 195,696 ---------- CONSUMER GROWTH-4.4% DRUGS-2.2% American Home Products Corp. .................. 125 7,305 Bristol-Myers Squibb Co. ...................... 250 13,075 Merck & Co., Inc. ............................. 400 25,564 Pfizer, Inc. .................................. 175 7,009 Pharmacia Corp. ............................... 250 11,487 Schering-Plough Corp. ......................... 400 14,496 ---------- 78,936 ---------- ENTERTAINMENT-0.8% Viacom, Inc. (a) .............................. 150 7,762 Walt Disney Co. ............................... 700 20,223 ---------- 27,985 ---------- HOSPITAL SUPPLIES-0.6% Abbott Laboratories ........................... 175 8,402 Johnson & Johnson ............................. 280 14,000 ---------- 22,402 ---------- PUBLISHING-0.5% R.R. Donnelley & Sons Co. ..................... 650 19,305 ---------- RADIO-TV BROADCASTING-0.3% AT&T Corp.-Liberty Media Corp. Cl.A (a) ....... 575 10,057 ---------- 158,685 ---------- SERVICES-2.1% AIR FREIGHT-0.2% FedEx Corp. (a) ............................... 200 8,040 ---------- RAILROADS-1.9% Burlington Northern Santa Fe Corp. ............ 750 22,628 Norfolk Southern Corp. ........................ 1,200 20,700 Union Pacific Corp. ........................... 450 24,709 ---------- 68,037 ---------- 76,077 ---------- NON-FINANCIAL-1.5% FOREST PRODUCTS-0.2% Louisiana-Pacific Corp. ....................... 650 7,625 ---------- HEAT/PLUMBING/AIR-0.7% Masco Corp. ................................... 975 24,336 ---------- HOME BUILDING-0.5% Centex Corp. .................................. 450 18,337 ---------- MISCELLANEOUS BUILDING-0.1% National Service Industries, Inc. ............. 250 5,643 ---------- 55,941 ---------- TECHNOLOGY-1.3% COMPUTERS-1.0% Hewlett-Packard Co. ........................... 300 8,580 International Business Machines Corp. ......... 190 21,470 Quantum Corp. (a) ............................. 550 5,549 ---------- 35,599 ---------- COMPUTER SERVICES/SOFTWARE-0.2% Electronic Data Systems Corp. ................. 125 7,813 ---------- MISCELLANEOUS INDUSTRIAL TECHNOLOGY-0.1% Avnet, Inc. ................................... 200 4,484 ---------- 47,896 ---------- Total Common Stocks (cost $3,241,480) .......................... 3,233,585 ---------- 4 Alliance Variable Products Series Fund ================================================================================ Principal Amount Company (000) U.S. $ Value -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT-17.8% TIME DEPOSIT-17.8% State Street Euro Dollar 3.50%, 7/02/01 (amortized cost $645,000) ................ $ 645 $ 645,000 ----------- TOTAL INVESTMENTS-106.9% (cost $3,886,480) ........................ 3,878,585 Other assets less liabilities-(6.9%) ........ (250,467) ----------- NET ASSETS-100% ............................. $ 3,628,118 ----------- -------------------------------------------------------------------------------- (a) Non-income producing security. See Notes to Financial Statements. 5 ALLIANCEBERNSTEIN VALUE PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2001 (unaudited) Alliance Variable Products Series Fund ================================================================================ ASSETS Investments in securities, at value (cost $3,886,480) ...... $ 3,878,585 Cash ....................................................... 529 Dividends and interest receivable .......................... 1,937 Receivable due from Adviser ................................ 1,744 ----------- Total assets ............................................... 3,882,795 ----------- LIABILITIES Payable for investment securities purchased ................ 251,096 Accrued expenses ........................................... 3,581 ----------- Total liabilities .......................................... 254,677 ----------- NET ASSETS .................................................... $ 3,628,118 =========== COMPOSITION OF NET ASSETS Capital stock, at par ...................................... $ 365 Additional paid-in capital ................................. 3,633,328 Undistributed net investment income ........................ 2,320 Net unrealized depreciation of investments ................. (7,895) ----------- $ 3,628,118 =========== Class B Shares Net assets ................................................. $ 3,628,118 =========== Shares of capital stock outstanding ........................ 364,820 =========== Net asset value per share .................................. $ 9.94 =========== -------------------------------------------------------------------------------- See Notes to Financial Statements. 6 ALLIANCEBERNSTEIN VALUE PORTFOLIO STATEMENT OF OPERATIONS Alliance Variable June 4, 2001(a) to June 30, 2001 (unaudited) Products Series Fund ================================================================================ INVESTMENT INCOME Interest ......................................................... $ 2,212 Dividends ........................................................ 1,945 ------- Total investment income .......................................... 4,157 ------- EXPENSES Advisory fee ..................................................... 1,148 Distribution fee - Class B ....................................... 383 Administrative ................................................... 4,701 Audit and legal .................................................. 1,118 Custodian ........................................................ 1,040 Printing ......................................................... 624 Directors' fees .................................................. 130 Transfer agency .................................................. 78 Miscellaneous .................................................... 208 ------- Total expenses ................................................... 9,430 Less: expenses waived and reimbursed ............................. (7,593) ------- Net expenses ..................................................... 1,837 ------- Net investment income ............................................ 2,320 ------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS Net change in unrealized appreciation/depreciation of investments (7,895) ------- NET DECREASE IN NET ASSETS FROM OPERATIONS .......................... $(5,575) ======= -------------------------------------------------------------------------------- (a) Commencement of operations. See Notes to Financial Statements. 7 ALLIANCEBERNSTEIN VALUE PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS Alliance Variable Products Series Fund ================================================================================
June 4, 2001(a) to June 30, 2001 (unaudited) ================ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income ..................................................... $ 2,320 Net change in unrealized appreciation/depreciation of investments ......... (7,895) ----------- Net decrease in net assets from operations ................................ (5,575) CAPITAL STOCK TRANSACTIONS Net increase .............................................................. 3,633,693 ----------- Total increase ............................................................ 3,628,118 NET ASSETS Beginning of period ....................................................... -0- ----------- End of period (including undistributed net investment income of $2,320) ... $ 3,628,118 ===========
-------------------------------------------------------------------------------- (a) Commencement of operations. See Notes to Financial Statements. 8 ALLIANCEBERNSTEIN VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2001 (unaudited) Alliance Variable Products Series Fund ================================================================================ NOTE A: Significant Accounting Policies The AllianceBernstein Value Portfolio (the "Portfolio") is a series of Alliance Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek long-term growth of capital. The Portfolio commenced operations on June 4, 2001. The Fund was incorporated in the State of Maryland on November 17, 1987, as an open-end series investment company. The Fund offers nineteen separately managed pools of assets which have differing investment objectives and policies. The Portfolio offers Class A and Class B shares. As of June 30, 2001, the Portfolio had only Class B shares outstanding. The Portfolio 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 the 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 Portfolio. 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. 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. 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 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 unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities. 3. Taxes It is the Portfolio'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 Portfolio accretes discounts as adjustments to interest income. Investment gains and losses are determined on the identified cost basis. 5. Income and Expenses Expenses attributable to a single portfolio are charged to that portfolio. Expenses of the Fund are charged to each portfolio in proportion to net assets. All income earned and expenses incurred by a portfolio with multi-class shares outstanding, are borne on a pro-rata basis by each outstanding class of shares based on the proportionate 9 ALLIANCEBERNSTEIN VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ interest in the portfolio represented by the net assets of such class, except that the portfolio's Class B shares bear the distribution fees. 6. Dividends and Distributions The Portfolio declares and distributes dividends and distributions from net investment income and net realized gains, respectively, if any, at least annually. Income dividends and capital gains distributions to shareholders are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with 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 period ended June 30, 2001, 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 1.20% of the average daily net assets for Class B shares. Expense waivers/reimbursements, if any, are accrued daily and paid monthly. For the period ended June 30, 2001, such waivers/reimbursements amounted to $7,593. Brokerage commissions paid on investment transactions for the period ended June 30, 2001, amounted to $4,125, of which $491 was paid to Sanford C. Bernstein & Co. LLC, an affiliate of the Adviser. The Portfolio compensates Alliance Global Investor Services, Inc., a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Portfolio. Such compensation amounted to $78 for the period ended June 30, 2001. -------------------------------------------------------------------------------- NOTE C: Distribution Plan The Portfolio has adopted a Plan for Class B shares pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Plan"). Under the Plan, the Portfolio pays distribution and servicing fees to the Distributor at an annual rate of up to .50% of the 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 the Portfolio's average daily net assets attributable to Class B shares. The Plan provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Portfolio is not obligated under the Plan to pay any distribution services fee in excess of the amounts set forth above. The purpose of the payments to the Distributor under the Plan is to compensate the Distributor for its distribution services with respect to the sale of the 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 Plan is characterized by the staff of the Commission as being of the "compensation" variety. In the event that the Plan is terminated or not continued, no distribution services fees (other than current amounts accrued but not yet paid) would be owed by the Portfolio to the Distributor. The Plan also provides that the Adviser may use its own resources to finance the distribution of the Portfolio's shares. 10 Alliance Variable Products Series Fund ================================================================================ NOTE D: Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the period ended June 30, 2001, were as follows: Purchases: Stocks and debt obligations ............................ $ 3,335,923 U.S. government and agencies ........................... - 0- Sales: Stocks and debt obligations ............................ $ 5,000 U.S. government and agencies ........................... - 0- At June 30, 2001, 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 are as follows: Gross unrealized appreciation .......................... $ 49,018 Gross unrealized depreciation .......................... (56,913) ----------- Net unrealized depreciation ............................ $ (7,895) =========== 1. Forward Exchange Currency Contracts The 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 Portfolio 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. The 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 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 the Portfolio has in that particular currency contract. At June 30, 2001, the Portfolio had no outstanding forward exchange currency contracts. 2. Option Transactions For hedging and investment purposes, the 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. In writ- 11 ALLIANCEBERNSTEIN VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ ing 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 period ended June 30, 2001. -------------------------------------------------------------------------------- NOTE E: Capital Stock There are 500,000,000 Class B shares of $.001 par value capital stock authorized. Transactions in capital stock were as follows: ------------------- ------------------ SHARES AMOUNT ------------------ ------------------ June 4, 2001(a) to June 4, 2001(a) to June 30, 2001 June 30, 2001 (unaudited) (unaudited) ================== ================== Shares sold ............................ 364,861 $ 3,634,109 Shares redeemed ........................ (41) (416) ------------- ------------- Net increase ........................... 364,820 $ 3,633,693 ============= ============= -------------------------------------------------------------------------------- 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 Portfolio, 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 Portfolio did not utilize the Facility during the period ended June 30, 2001. -------------------------------------------------------------------------------- (a) Commencement of operations. 12 ALLIANCEBERNSTEIN VALUE PORTFOLIO FINANCIAL HIGHLIGHTS Alliance Variable Products Series Fund ================================================================================ Selected Data For A Share Of Capital Stock Outstanding Throughout The Period ------------- CLASS B ------------- June 4, 2001(a) to June 30, 2001 (unaudited) ============= Net asset value, beginning of period ......................... $ 10.00 ----------- Income From Investment Operations Net investment income (b)(c) ................................. .01 Net realized and unrealized loss on investment transactions .. (.07) ----------- Net decrease in net asset value from operations .............. (.06) ----------- Net asset value, end of period ............................... $ 9.94 =========== Total Return Total investment return based on net asset value (d) ......... (.60)% Ratios/Supplemental Data Net assets, end of period (000's omitted) .................... $ 3,628 Ratio to average net assets of: Expenses, net of waivers and reimbursements ............... 1.20%(e) Expenses, before waivers and reimbursements ............... 6.16%(e) Net investment income (c) ................................. 1.51%(e) -------------------------------------------------------------------------------- (a) Commencement of operations. (b) Based on average shares outstanding. (c) Net of expenses reimbursed or waived by the Adviser. (d) 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. (e) 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) Clifford L. Michel (1) Donald J. Robinson (1) OFFICERS Kathleen A. Corbet, Senior Vice President Alfred L. Harrison, Senior Vice President Peter Anastos, Vice President Andrew Aran, 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 Kenneth T. Carty, Vice President Frank Caruso, Vice President John F. Chiodi, Vice President Paul J. DeNoon, Vice President Joseph C. Dona, Vice President Gregory Dube, Vice President Marilyn G. Fedak, Vice President F. Jeanne Goetz, Vice President Jane Mack Gould, Vice President David A. Kruth, Vice President Alan E. Levi, Vice President Michael Levy, Vice President Gerald T. Malone, Vice President Andrew Moloff, Vice President Michael Mon, Vice President Raymond J. Papera, Vice President Douglas J. Peebles, Vice President Daniel G. Pine, Vice President Steven Pisarkiewicz, Vice President John Ricciardi, Vice President Paul C. Rissman, Vice President Gregory R. Sawers, Vice President Kevin F. Simms, Vice President Kenneth D. Smalley, Vice President Michael A. Snyder, Vice President Annie Tsao, 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 Global Investor 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.)