N-30D 1 edg8133.txt VARP MONEY MARKET ALLIANCE ---------------------------------------------- VARIABLE PRODUCTS ---------------------------------------------- SERIES FUND ---------------------------------------------- MONEY MARKET PORTFOLIO ---------------------------------------------- SEMI-ANNUAL REPORT JUNE 30, 2002 Investment Products Offered --------------------------- > Are Not FDIC Insured > May Lose Value > Are Not Bank Guaranteed --------------------------- MONEY MARKET PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2002 (unaudited) Alliance Variable Products Series Fund =============================================================================== Principal Amount Company (000) U.S. $ Value ------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS - 60.0% Federal Home Loan Bank 1.74%, 9/09/02 ........................... $ 4,000 $ 3,986,467 Federal Home Loan Mortgage Corp. 1.72%, 8/20/02 ........................... 17,000 16,959,389 1.74%, 9/12/02 ........................... 4,000 3,985,887 1.79%, 9/18/02 ........................... 3,000 2,988,216 1.79%, 9/25/02 ........................... 1,523 1,516,487 1.88%, 7/01/02 ........................... 24,800 24,800,000 2.45%, 6/17/03 ........................... 5,000 5,000,000 Federal National Mortgage Association 1.69%, 9/27/02 FRN ....................... 5,000 4,999,159 1.69%, 3/27/03 FRN ....................... 5,000 4,997,069 1.72%, 11/29/02 FRN ...................... 10,000 9,998,859 1.74%, 5/05/03 FRN ....................... 5,000 4,996,733 1.74%, 9/18/02 ........................... 4,000 3,984,727 1.75%, 9/03/02 ........................... 4,375 4,361,389 1.78%, 9/11/02 ........................... 2,100 2,092,524 ------------- Total U.S. Government Agency Obligations (amortized cost $94,666,906) ............. 94,666,906 ------------- COMMERCIAL PAPER - 29.5% Banque Caisse d'Epargne L'Etat 1.83%, 9/03/02 ........................... 4,000 3,986,987 CDC Commercial Paper, Inc. 1.75%, 8/06/02 ........................... 6,000 5,989,500 Eksport Finans ALS 1.88%, 9/16/02 ........................... 2,300 2,290,751 General Electric Capital Corp. 1.79%, 8/12/02 ........................... 5,000 4,989,558 KBC Financial Products, Ltd. 1.79%, 9/25/02 ........................... 2,000 1,991,448 Prudential Plc 1.79%, 9/06/02 ........................... 3,000 2,990,006 Salomon Smith Barney, Inc. 1.79%, 9/10/02 ........................... 3,500 3,487,644 Shell Finance 1.86%, 9/05/02 ........................... 4,000 3,986,360 Snap-On, Inc. 1.80%, 9/04/02 ........................... 2,000 1,993,500 Toyota Motor Credit Corp. 1.76%, 7/18/02 ........................... 6,000 5,995,013 UBS Finance, Inc. 2.00%, 7/01/02 ........................... 5,000 5,000,000 Virginia Electric & Power Co. 1.77%, 7/10/02 ........................... 2,000 1,999,115 Wachovia Bank NA 1.90%, 10/15/02 .......................... 1,800 1,789,930 ------------- Total Commercial Paper (amortized cost $46,489,812) ............. 46,489,812 ------------- CERTIFICATES OF DEPOSIT - 6.2% Credit Agricole Indosuez 1.748%, 6/30/03 FRN ...................... 5,000 4,997,682 Region's Bank 1.78%, 9/27/02 ........................... 2,000 2,000,000 Westdeutsche Landesbank 1.79%, 8/01/02 ........................... 2,700 2,700,000 ------------- Total Certificates of Deposit (amortized cost $9,697,682) .............. 9,697,682 ------------- CORPORATE OBLIGATIONS - 4.4% Merck & Co., Inc. 1.80%, 10/25/02 FRN ...................... 1,000 1,000,000 Merrill Lynch & Co., Inc. 1.813%, 4/01/03 FRN MTN ...................................... 4,000 4,000,000 National City Bank 1.923%, 9/03/02 FRN ...................... 2,000 2,002,971 ------------- Total Corporate Obligations (amortized cost $7,002,971) .............. 7,002,971 ------------- TOTAL INVESTMENTS - 100.1% (cost $157,857,371) ...................... 157,857,371 Other assets less liabilities - (0.1%) ..................... (170,064) ------------- NET ASSETS - 100% ........................... $ 157,687,307 ============= -------------------------------------------------------------------------------- Glossary of Terms: FRN - Floating Rate Note MTN - Medium Term Note See Notes to Financial Statements. 1 MONEY MARKET PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ ASSETS Investments in securities, at value (cost $157,857,371) ..... $157,857,371 Cash ........................................................ 79,234 Interest receivable ......................................... 44,163 ------------ Total assets ................................................ 157,980,768 ------------ LIABILITIES Dividends payable ........................................... 134,731 Advisory fee payable ........................................ 61,847 Accrued expenses ............................................ 96,883 ------------ Total liabilities ........................................... 293,461 ------------ NET ASSETS ..................................................... $157,687,307 ============ COMPOSITION OF NET ASSETS Capital stock, at par ....................................... $ 157,681 Additional paid-in capital .................................. 157,523,092 Undistributed net investment income ......................... 6,534 ------------ $157,687,307 ============ Class A Shares Net assets .................................................. $109,794,492 ============ Shares of capital stock outstanding ......................... 109,788,246 ============ Net asset value per share ................................... $ 1.00 ============ Class B Shares Net assets .................................................. $ 47,892,815 ============ Shares of capital stock outstanding ......................... 47,892,858 ============ Net asset value per share ................................... $ 1.00 ============ -------------------------------------------------------------------------------- See Notes to Financial Statements 2 MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ INVESTMENT INCOME Interest ..................................................... $ 1,516,573 ------------ EXPENSES Advisory fee ................................................. 410,082 Distribution fee - Class B ................................... 62,653 Custodian .................................................... 57,196 Administrative ............................................... 46,395 Printing ..................................................... 36,019 Audit and legal .............................................. 15,688 Directors' fees .............................................. 2,172 Transfer agency .............................................. 724 Miscellaneous ................................................ 3,258 ------------ Total expenses ............................................... 634,187 ------------ Net investment income ........................................ 882,386 ------------ REALIZED LOSS ON INVESTMENTS Net realized gain on investment transactions ................. 15 ------------ NET INCREASE IN NET ASSETS FROM OPERATIONS ...................... $ 882,401 ============ -------------------------------------------------------------------------------- See Notes to Financial Statements. 3 MONEY MARKET 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 IN NET ASSETS FROM OPERATIONS Net investment income ......................................... $ 882,386 $ 5,699,356 Net realized gain on investments .............................. 15 457 ------------- ------------- Net increase in net assets from operations .................... 882,401 5,699,813 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A ..................................................... (656,090) (4,947,616) Class B ..................................................... (226,857) (751,740) CAPITAL STOCK TRANSACTIONS Net increase (decrease) ....................................... (20,173,584) 21,832,593 ------------- ------------- Total increase (decrease) ..................................... (20,174,130) 21,833,050 NET ASSETS Beginning of period ........................................... 177,861,437 156,028,387 ------------- ------------- End of period (including undistributed net investment income of $6,534 and $6,623, respectively) .................. $ 157,687,307 $ 177,861,437 ============= =============
-------------------------------------------------------------------------------- See Notes to Financial Statements. 4 MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ NOTE A: Significant Accounting Policies The Money Market Portfolio (the "Portfolio") is a series of Alliance Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek safety of principal, excellent liquidity and maximum current income to the extent consistent with the first two objectives. The Fund was incorporated in the State of Mary land 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. 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. 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 Securities in which the 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. 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. 3. 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. 4. 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 such class, except that the portfolio's Class B shares bear the distribution fees. 5. Dividends and Distributions The Portfolio declares dividends daily from net investment income. The dividends are paid monthly. Net realized gains distributions, if any, will be made 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 .50% of the Portfolio's average daily net assets. Pursuant to the advisory agreement, the Portfolio paid $46,395 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 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 5 MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS continued Alliance Variable Products Series Fund ================================================================================ 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, there were no such waivers or reimbursements. 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 $724 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 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. -------------------------------------------------------------------------------- NOTE D: Investment Transactions At June 30, 2002, the cost of investments for federal income tax purposes was the same as the cost for financial reporting purposes. -------------------------------------------------------------------------------- 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 ....................... $5,699,356 $7,531,220 Total taxable distributions .............. 5,699,356 7,531,220 ---------- ---------- Total distributions paid ................. $5,699,356 $7,531,220 ========== ========== As of December 31, 2001, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income .................................. $ 7,080 ----------- Accumulated earnings ........................................... 7,080 ----------- Total accumulated earnings/(deficit) ........................... $ 7,080 =========== 6 Alliance Variable Products Series Fund ================================================================================ NOTE F: Capital Stock There are 2,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 1,000,000,000 authorized shares. Transactions in capital stock were as follows:
------------------------------------ ------------------------------------ SHARES AMOUNT ------------------------------------ ------------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended June 30, 2002 December 31, June 30, 2002 December 31, (unaudited) 2001 (unaudited) 2001 ================ ============== ================ ============== Class A Shares sold ....................... 78,825,010 428,367,063 $ 78,825,010 $ 428,367,063 Shares issued in reinvestment of dividends ...................... 656,090 4,947,617 656,090 4,947,617 Shares redeemed ................... (98,386,630) (450,884,651) (98,386,630) (450,884,651) -------------- -------------- -------------- -------------- Net decrease ...................... (18,905,530) (17,569,971) $ (18,905,530) $ (17,569,971) ============== ============== ============== ============== Class B Shares sold ....................... 75,923,478 130,244,017 $ 75,923,478 $ 130,244,017 Shares issued in reinvestment of dividends ...................... 226,857 751,740 226,857 751,740 Shares redeemed ................... (77,418,389) (91,593,193) (77,418,389) (91,593,193) -------------- -------------- -------------- -------------- Net increase (decrease) ........... (1,268,054) 39,402,564 $ (1,268,054) $ 39,402,564 ============== ============== ============== ==============
7 MONEY MARKET 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 2000 1999 1998 1997 ============= ============ ============ ============ ============ ============ Net asset value, beginning of period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net investment income ...................... .01 .04 .06 .05 .05 .05 -------- -------- -------- -------- -------- -------- Less: Dividends Dividends from net investment income ....... (.01) (.04) (.06) (.05) (.05) (.05) -------- -------- -------- -------- -------- -------- Net asset value, end of period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== ======== Total Return Total investment return based on net asset value (a) ......................... .57% 3.57% 5.91% 4.69% 4.98% 5.11% Ratios/Supplemental Data Net assets, end of period (000's omitted) $109,794 $128,700 $146,270 $134,467 $119,574 $ 67,584 Ratio to average net assets of: Expenses ................................ .70%(b) .63% .67% .64% .68% .64% Net investment income ................... 1.15%(b) 3.55% 5.73% 4.59% 4.84% 5.00% --------------------------------------------------------- Class B --------------------------------------------------------- Six Months Year Ended June 16, Ended December 31, 1999(c) to June 30, 2002 ========================== December 31, (unaudited) 2001 2000 1999 ============== ============ ============ ============ Net asset value, beginning of period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- Income From Investment Operations Net investment income ................................. -0- .03 .05 .02 -------- -------- -------- -------- Less: Dividends Dividends from net investment income .................. -0-(d) (.03) (.05) (.02) -------- -------- -------- -------- Net asset value, end of period ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== Total Return Total investment return based on net asset value (a) .. .45% 3.32% 5.65% 2.52% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $ 47,893 $ 49,161 $ 9,758 $ 1,163 Ratio to average net assets of: Expenses ........................................... .95%(b) .90% .95% .89%(b) Net investment income .............................. .91%(b) 2.60% 5.64% 4.71%(b)
-------------------------------------------------------------------------------- (a) 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. (b) Annualized. (c) Commencement of distribution. (d) Amount is less than $.01 per share. 8 MONEY MARKET 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 Jack 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. 9 (This page left intentionally blank.)