N-30D 1 edg8119.txt VARP GLOBAL DOLLAR ALLIANCE -------------------------- VARIABLE PRODUCTS -------------------------- SERIES FUND -------------------------- GLOBAL DOLLAR -------------------------- GOVERNMENT PORTFOLIO -------------------------- SEMI-ANNUAL REPORT JUNE 30, 2002 Investment Products Offered --------------------------- > Are Not FDIC Insured > May Lose Value > Are Not Bank Guaranteed --------------------------- GLOBAL DOLLAR GOVERNMENT PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ Principal Amount (000) U.S. $ Value -------------------------------------------------------------------------------- SOVEREIGN DEBT OBLIGATIONS-68.5% COLLATERALIZED BRADY BONDS-1.4% BULGARIA-1.1% Republic of Bulgaria FRN 2.812%, 7/28/24 .......................... $ 200 $ 179,000 ---------- PANAMA-0.3% Republic of Panama 4.50%, 7/17/14 ........................... 69 58,333 ---------- Total Collateralized Brady Bonds (cost $234,463) .......................... 237,333 ---------- SOVEREIGN DEBT SECURITIES-67.1% BRAZIL-8.2% Republic of Brazil 11.00%, 8/17/40 .......................... 2,155 1,201,412 12.00%, 4/15/10 .......................... 100 62,488 12.75%, 1/15/20 .......................... 200 124,000 ---------- 1,387,900 ---------- BULGARIA-1.0% Republic of Bulgaria 8.25%, 1/15/15 (a) ....................... 175 173,513 ---------- COLOMBIA-2.0% Republic of Colombia 11.75%, 2/25/20 .......................... 350 340,375 ---------- DOMINICAN REPUBLIC-0.8% Republic of Dominican Republic 9.50%, 9/27/06 (a) ....................... 125 132,000 ---------- ECUADOR-3.8% Republic of Ecuador 5.00%, 8/15/30 (a) ....................... 750 375,000 12.00%, 11/15/12 (a) ..................... 375 264,375 ---------- 639,375 ---------- JAMAICA-0.6% Government of Jamaica 11.625%, 1/15/22 ......................... 80 92,800 ---------- MEXICO-14.8% United Mexican States, Warrants, expiring 6/01/03 ......................... 461 1,383 11.375%, 9/15/16 ......................... 1,700 2,095,250 United Mexican States-Global Bonds 8.125%, 12/30/19 ......................... 200 194,500 10.375%, 2/17/09 ......................... 130 148,395 11.50%, 5/15/26 .......................... 50 63,375 ---------- 2,502,903 ---------- PANAMA-2.2% Republic of Panama 9.375%, 4/01/29 .......................... 100 98,900 9.625%, 2/08/11 .......................... 125 120,937 10.75%, 5/15/20 .......................... 150 152,625 ---------- 372,462 ---------- PHILIPPINES-2.1% Republic of Philippines 9.375%, 1/18/17 .......................... 150 153,225 9.875%, 1/15/19 .......................... 75 74,175 10.625%, 3/16/25 ......................... 125 129,063 ---------- 356,463 ---------- QATAR-0.3% State of Qatar 9.75%, 6/15/30 (a) ....................... 45 55,125 ---------- RUSSIA-19.9% Russia Ministry of Finance 3.00%, 5/14/06 ........................... 270 210,951 3.00%, 5/14/08 ........................... 100 66,500 Russian Federation 5.00%, 3/31/30 (a) ....................... 4,425 3,080,906 ---------- 3,358,357 ---------- SOUTH AFRICA-1.2% Republic of South Africa 7.375%, 4/25/12 .......................... 200 197,740 ---------- TRINIDAD & TOBAGO-1.4% Republic of Trinidad & Tobago 9.75%, 7/01/20 (a) ....................... 200 228,000 ---------- TURKEY-3.4% Republic of Turkey 11.75%, 6/15/10 .......................... 195 175,792 11.875%, 1/15/30 ......................... 450 382,500 12.375%, 6/15/09 ......................... 25 23,163 ---------- 581,455 ---------- UKRAINE-2.5% Government of Ukraine 11.00%, 3/15/07 (a) ...................... 418 419,137 ---------- URUGUAY-0.3% Republic of Uruguay 8.75%, 6/22/10 ........................... 100 57,650 ---------- VENEZUELA-2.6% Republic of Venezuela 9.25%, 9/15/27 ........................... 675 432,000 ---------- Total Sovereign Debt Securities (cost $11,089,930) ....................... 11,327,255 ---------- Total Sovereign Debt Obligations (cost $11,324,393) ....................... 11,564,588 ---------- CORPORATE DEBT OBLIGATIONS-11.3% BANKING-2.0% Banque Centrale de Tunisie 7.375%, 4/25/12 .......................... 100 96,750 Chohung Bank 11.875%, 4/01/10 (a) ..................... 100 115,137 Hanvit Bank 12.75%, 3/01/10 (a) ...................... 70 82,337 Unibanco Uniao de Bancos 9.375%, 4/30/07 (a) ...................... 50 44,000 ---------- 338,224 ---------- 1 Alliance Variable Products Series Fund ================================================================================ Principal Amount (000) U.S. $ Value -------------------------------------------------------------------------------- COMMUNICATIONS-1.6% Mobile Telesystems Finance SA 10.95%, 12/21/04 (a) ..................... $ 155 $ 152,287 Philippine Long Distance Telephone Co. ............................ 11.375%, 5/15/12 (a) ..................... 125 123,750 ----------- 276,037 ----------- ENERGY-1.0% Monterrey Power SA 9.625%, 11/15/09 (a) ..................... 45 47,485 Petrobras International Finance Co. .............................. 9.125%, 2/01/07 (a) ...................... 150 117,375 ----------- 164,860 ----------- INDUSTRIAL-1.5% Pemex Project Funding Master Trust 8.00%, 11/15/11 (a) ...................... 250 246,875 ----------- PAPER/PACKAGING-0.3% Corp Durango SA 13.75%, 7/15/09 (a) ...................... 60 51,000 ----------- PETROLEUM PRODUCTS-1.8% A.O. Siberian Oil Co. ....................... 11.50%, 2/13/07 .......................... 125 124,062 Petronas Capital Ltd. ....................... 7.875%, 5/22/22 (a) ...................... 175 174,368 ----------- 298,430 ----------- PUBLIC UTILITIES- TELEPHONE-0.6% PTC International Finance II SA 11.25%, 12/01/09 ......................... 100 105,000 ----------- YANKEE BONDS-2.5% Petroleos Mexicanos 9.25%, 3/30/18 ........................... 400 420,000 Transportacion Maritima Mexicana SP 1.00%, 5/15/03 ........................... 12 10,230 ----------- 430,230 ----------- Total Corporate Debt Obligations (cost $1,923,505) ........................ 1,910,656 ----------- SHORT-TERM INVESTMENT-17.5% TIME DEPOSIT-17.5% State Street Bank & Trust Co. 1.25%, 7/01/02 (cost $2,961,000) ........................ 2,961 2,961,000 ----------- TOTAL INVESTMENTS-97.3% (cost $16,208,898) ....................... 16,436,244 Other assets less liabilities-2.7% ......................... 457,469 ----------- NET ASSETS-100% ............................. $16,893,713 =========== -------------------------------------------------------------------------------- (a) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally applied to certain qualified buyers. At June 30, 2002 the aggregate market value of these securities amounted to $5,882,670 or 34.8% of net assets. Glossary: FRN - Floating Rate Note See Notes to Financial Statements. 2 GLOBAL DOLLAR GOVERNMENT PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ ASSETS Investments in securities, at value (cost $16,208,898) ..... $ 16,436,244 Cash ....................................................... 32,915 Interest receivable ........................................ 399,145 Receivable for investment securities sold .................. 368,057 ------------ Total assets ............................................... 17,236,361 ------------ LIABILITIES Payable for investment securities purchased ................ 319,323 Advisory fee payable ....................................... 9,521 Accrued expenses ........................................... 13,804 ------------ Total liabilities .......................................... 342,648 ------------ NET ASSETS .................................................... $ 16,893,713 ============ COMPOSITION OF NET ASSETS Capital stock, at par ...................................... $ 1,676 Additional paid-in capital ................................. 20,639,439 Undistributed net investment income ........................ 566,905 Accumulated net realized loss on investments ............... (4,541,653) Net unrealized appreciation of investments ................. 227,346 ------------ $ 16,893,713 ============ Class A Shares Net assets ................................................. $ 16,893,713 ============ Shares of capital stock outstanding ........................ 1,676,029 ============ Net asset value per share .................................. $ 10.08 ============ -------------------------------------------------------------------------------- See Notes to Financial Statements. 3 GLOBAL DOLLAR GOVERNMENT PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ INVESTMENT INCOME Interest .................................................. $ 643,426 --------- EXPENSES Advisory fee .............................................. 49,007 Custodian ................................................. 36,929 Administrative ............................................ 34,500 Audit and legal ........................................... 11,481 Printing .................................................. 1,899 Directors' fees ........................................... 1,000 Transfer agency ........................................... 544 Miscellaneous ............................................. 1,356 --------- Total expenses ............................................ 136,716 Less: expenses waived and reimbursed (see Note B) ......... (61,358) --------- Net expenses .............................................. 75,358 --------- Net investment income ..................................... 568,068 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investment transactions .............. 366,123 Net realized gain on options written ...................... 2,680 Net change in unrealized appreciation/depreciation of investments .......................................... (868,009) --------- Net loss on investments and options written ............... (499,206) --------- NET INCREASE IN NET ASSETS FROM OPERATIONS ..................... $ 68,862 ========= -------------------------------------------------------------------------------- See Notes to Financial Statements. 4 GLOBAL DOLLAR GOVERNMENT PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS Alliance Variable Products Series Fund ================================================================================
Six Months Ended Year Ended June 30, 2002 December 31, (unaudited) 2001 ============ ============ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income ......................... $ 568,068 $ 1,133,260 Net realized gain (loss) on investments and options written ......................... 368,803 (1,139,909) Net change in unrealized appreciation/ depreciation of investments ................. (868,009) 964,480 ------------ ------------ Net increase in net assets from operations .... 68,862 957,831 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A ..................................... (1,130,687) (1,095,933) CAPITAL STOCK TRANSACTIONS Net increase .................................. 6,707,007 1,963,274 ------------ ------------ Total increase ................................ 5,645,182 1,825,172 NET ASSETS Beginning of period ........................... 11,248,531 9,423,359 ------------ ------------ End of period (including undistributed net investment income of $566,905 and $1,129,524, respectively) ...... $ 16,893,713 $ 11,248,531 ============ ============
-------------------------------------------------------------------------------- See Notes to Financial Statements. 5 GLOBAL DOLLAR GOVERNMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ NOTE A: Significant Accounting Policies The Global Dollar Government Portfolio (the "Portfolio") is a series of Alliance Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek a high level of current income and, secondarily, capital appreciation. 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 December 31, 2001, the Portfolio had only Class A 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 withholding 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 in vestments 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 amortizes premiums and 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 interest in the portfolio represented by the net assets of 6 GLOBAL DOLLAR GOVERNMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ such class, except that the portfolio's Class B shares bear the distribution fees. 6. Repurchase Agreements It is the Portfolio's policy that its custodian or designated subcustodian take control of securities as collateral under repurchase agreements and to determine on a daily basis that the value of such securities are sufficient to cover the value of the repurchase agreements. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of collateral by the Portfolio may be delayed or limited. 7. 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. Pursuant to the advisory agreement, the Portfolio paid $34,500 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, 2002. Prior to May 1, 2002, the Adviser agreed to waive its fee and to reimburse the additional operating expenses ("Expense Limitation Undertaking") 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. The Adviser terminated the Expense Limitation Undertaking effective May 1, 2002. Any expense waivers or reimbursements are accrued daily and paid monthly. For the six months ended June 30, 2002, the Adviser waived fees in the amount of $34,500 and reimbursed additional expenses in the amount of $26,858. The Portfolio compensates Alliance Global Investor Services, Inc. (AGIS), 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 $544 for the six months ended June 30, 2002. -------------------------------------------------------------------------------- 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 and servicing fees 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 and servicing 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. 7 Alliance Variable Products Series Fund ================================================================================ NOTE D: Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2002, were as follows: Purchases: Stocks and debt obligations ............................. $13,885,626 U.S. government and agencies ............................ -0- Sales: Stocks and debt obligations ............................. $ 9,774,636 U.S. government and agencies ............................ -0- At June 30, 2002, 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 ............................ $ 920,883 Gross unrealized depreciation ............................ (693,537) --------- Net unrealized appreciation .............................. $ 227,346 ========= 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 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. Transactions in options written for the six months ended June 30, 2002 were as follows: Number Premiums of Contracts Received ============ ======== Options outstanding at beginning of period ............. -0- -0- Options written ........................................ 750,000 6,005 Options terminated in closing purchase transactions .... (600,000) (5,060) Options expired ........................................ (150,000) (945) -------- ------ Options outstanding at June 30, 2002 ................... -0- $-0- -------- ------ 8 GLOBAL DOLLAR GOVERNMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ NOTE E: Distributions to Shareholders The tax character of distributions paid during the fiscal year ended December 31, 2001 and December 31, 2000 were as follows: 2001 2000 ========== ========== Distributions paid from: Ordinary income ..................................... $1,095,933 $1,112,048 ---------- ---------- Total taxable distributions ......................... 1,095,933 1,112,048 ---------- ---------- Total distributions paid ............................ $1,095,933 $1,112,048 ========== ========== As of December 31, 2001, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income ....................... $ 1,129,740 ----------- Accumulated earnings ................................ 1,129,740 Accumulated capital and other losses ................ (4,837,670)(a) Unrealized appreciation/(depreciation) .............. 1,022,353(b) ----------- Total accumulated earnings/(deficit) ................ $(2,685,577) =========== (a) On December 31, 2001, the Portfolio had a net capital loss carryforward of $4,420,272 of which $1,609,599 expires in the year 2006, $2,129,840 expires in the year 2007 and $680,833 expires in the year 2009. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Portfolio's next taxable year. For the year ended December 31, 2001, the Portfolio deferred to January 1, 2002, post October capital losses of $417,398. (b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between book and tax amortization methods for premium and market discount. -------------------------------------------------------------------------------- NOTE F: Capital Stock There are 500,000,000 Class A shares of $.001 par value capital stock authorized. Transactions in capital stock were as follows:
------------------------------- ---------------------------------- SHARES AMOUNT ------------------------------- ---------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended June 30, 2002 December 31, June 30, 2002 December 31, (unaudited) 2001 (unaudited) 2001 ======== ========= =========== =========== Class A Shares sold .................... 628,239 366,081 $ 6,901,535 $ 3,848,295 Shares issued in reinvestment of dividends ................... 107,582 103,390 1,130,687 1,095,933 Shares redeemed ................ (118,216) (286,535) (1,325,215) (2,980,954) -------- -------- ----------- ----------- Net increase ................... 617,605 182,936 $ 6,707,007 $ 1,963,274 ======== ======== =========== ===========
-------------------------------------------------------------------------------- NOTE G: 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 H: 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 six months ended June 30, 2002. -------------------------------------------------------------------------------- 9 GLOBAL DOLLAR GOVERNMENT 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, 2002 =================================================================== (unaudited) 2001(a) 2000 1999 1998 1997 ========== ========== ========== ========== ========== ========== Net asset value, beginning of period ......... $ 10.63 $ 10.76 $ 10.79 $ 10.18 $ 14.65 $ 14.32 ---------- ---------- ---------- ---------- ---------- ---------- Income From Investment Operations Net investment income (b)(c) ................. .47 1.11 1.27 1.21 1.20 1.17 Net realized and unrealized gain (loss) on investment transactions ................ (.18) (.10) .14 1.08 (4.03) .70 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net asset value from operations ..................... .29 1.01 1.41 2.29 (2.83) 1.87 ---------- ---------- ---------- ---------- ---------- ---------- Less: Dividends and Distributions Dividends from net investment income ......... (.84) (1.14) (1.44) (1.68) (.95) (.61) Distributions from net realized gain on investments ............................... -0- -0- -0- -0- (.69) (.93) ---------- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions ............ (.84) (1.14) (1.44) (1.68) (1.64) (1.54) ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ............... $ 10.08 $ 10.63 $ 10.76 $ 10.79 $ 10.18 $ 14.65 ========== ========== ========== ========== ========== ========== Total Return Total investment return based on net asset value (d) ........................... 2.42% 9.37% 14.06% 26.08% (21.71)% 13.23% Ratios/Supplemental Data Net assets, end of period (000's omitted) ........................... $ 16,894 $ 11,249 $ 9,423 $ 10,139 $ 10,380 $ 15,378 Ratio to average net assets of: Expenses, net of waivers and reimbursements .......................... 1.15%(e) .95% .95% .95% .95% .95% Expenses, before waivers and reimbursements .......................... 2.09%(e) 2.37% 2.42% 2.29% 1.75% 1.29% Net investment income (b) ................. 8.69%(e) 10.63% 11.71% 12.42% 9.49% 7.87% Portfolio turnover rate ...................... 85% 176% 148% 117% 166% 214%
-------------------------------------------------------------------------------- (a) As required, effective January 1, 2001, the Portfolio has adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing premium on debt securities for financial reporting purposes only. For the year ended December 31, 2001, the effect of this change to Class A was to decrease net investment income by less than .01 per share, decrease net realized and unrealized loss on investments by less than .01 per share and decrease the ratio of net investment income to average net assets from 10.65% to 10.63%. Per share, ratios and supplemental data for periods prior to January 1, 2001 have not been restated to reflect this change in presentation. (b) Net of expenses reimbursed or waived by the Adviser. (c) Based on average shares outstanding. (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. 10 GLOBAL DOLLAR GOVERNMENT PORTFOLIO 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 Andrew S. Adelson, 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 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 Daniel Nordby, Vice President Raymond J. Papera, Vice President Douglas J. Peebles, Vice President Jeffrey S. Phlegar, Vice President Daniel G. Pine, Vice President Steven Pisarkiewicz, Vice President Michael J. Reilly, Vice President John Ricciardi, Vice President Paul C. Rissman, Vice President Kevin F. Simms, Vice President Michael A. Snyder, Vice President Annie Tsao, Vice President Jean Van De Walle, Vice President Richard A. Winge, 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 5 Times Square New York, NY 10036 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. 11 (This page left intentionally blank.) (This page left intentionally blank.)