N-30D 1 edg8137.txt VARP ALLIANCE BERNSTEIN INTERNATIONAL ALLIANCE ---------------------------------------------------- VARIABLE PRODUCTS ---------------------------------------------------- SERIES FUND ---------------------------------------------------- ALLIANCEBERNSTEIN ---------------------------------------------------- INTERNATIONAL VALUE ---------------------------------------------------- PORTFOLIO ---------------------------------------------------- SEMI-ANNUAL REPORT JUNE 30, 2002 Investment Products Offered --------------------------- > Are Not FDIC Insured > May Lose Value > Are Not Bank Guaranteed --------------------------- ALLIANCE BERNSTEIN INTERNATIONAL VALUE PORTFOLIO TEN LARGEST HOLDINGS June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ -------------------------------------------------------------------------------- PERCENT OF COMPANY U.S. $ VALUE NET ASSETS -------------------------------------------------------------------------------- Honda Motor Co., Ltd. $ 969,040 4.1% -------------------------------------------------------------------------------- DSM NV 940,304 4.0 -------------------------------------------------------------------------------- Bank of Nova Scotia 913,427 3.9 -------------------------------------------------------------------------------- Royal & Sun Alliance Insurance Group Plc 844,563 3.6 -------------------------------------------------------------------------------- Canon, Inc. 793,643 3.4 -------------------------------------------------------------------------------- Nissan Motor Co., Ltd. 789,388 3.4 -------------------------------------------------------------------------------- BNP Paribas, SA 783,868 3.3 -------------------------------------------------------------------------------- Eni S.p.A 782,419 3.3 -------------------------------------------------------------------------------- Safeway Plc 764,635 3.2 -------------------------------------------------------------------------------- PSA Peugoet Citroen 748,527 3.2 ---------- ---- -------------------------------------------------------------------------------- $8,329,814 35.4% -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION June 30, 2002 (unaudited) ================================================================================ -------------------------------------------------------------------------------- PERCENT OF SECTOR U.S. $ VALUE NET ASSETS -------------------------------------------------------------------------------- Capital Equipment $ 2,506,955 10.7% -------------------------------------------------------------------------------- Construction 2,334,345 9.9 -------------------------------------------------------------------------------- Consumer Cyclical 2,439,971 10.4 -------------------------------------------------------------------------------- Consumer Staples 422,427 1.8 -------------------------------------------------------------------------------- Energy 1,469,209 6.3 -------------------------------------------------------------------------------- Finance 7,132,359 30.4 -------------------------------------------------------------------------------- Industrial 445,640 1.9 -------------------------------------------------------------------------------- Industrial Commodities 2,217,852 9.4 -------------------------------------------------------------------------------- Resources 164,555 0.7 -------------------------------------------------------------------------------- Services 105,406 0.4 -------------------------------------------------------------------------------- Technology/Electronics 793,643 3.4 -------------------------------------------------------------------------------- Telecommunications 668,254 2.8 -------------------------------------------------------------------------------- Utilitities 587,408 2.5 ----------- ----- -------------------------------------------------------------------------------- Total Investments* 21,288,024 90.6 -------------------------------------------------------------------------------- Cash and receivables, net of liabilities 2,205,860 9.4 ----------- ----- -------------------------------------------------------------------------------- Net Assets $23,493,884 100.0% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- * Excludes short-term obligations. 1 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value -------------------------------------------------------------------------------- COMMON STOCKS-90.6% AUSTRALIA-1.6% Australia and New Zealand Banking Group, Ltd. ..................... 33,700 $ 366,024 ---------- BRAZIL-1.6% Petroleo Brasileiro, SA (ADR) .............. 22,300 385,694 ---------- CANADA-7.6% Bank of Nova Scotia ........................ 27,500 913,427 Canadian National Railway Co ...................................... 2,000 105,406 Magna International, Inc. Cl.A .................................... 6,700 461,901 Talisman Energy, Inc. ...................... 6,700 301,096 ---------- 1,781,830 ---------- FINLAND-1.9% Stora Enso Oyj ............................. 31,000 433,622 ---------- FRANCE-16.3% Arcelor (a) ................................ 26,500 375,378 Assurances Generales de France (AGF) ......................... 13,900 637,414 BNP Paribas, SA ............................ 14,200 783,868 Cie de St. Gobain (a) ...................... 13,200 591,391 PSA Peugoet Citroen (a) .................... 14,450 748,527 Societe Generale ........................... 10,620 698,260 ---------- 3,834,838 ---------- GERMANY-4.1% AMB Generali Holding AG .................... 3,300 323,671 Hannover Rueckversicherungs-AG ................... 2,650 210,285 Heidelberger Zement AG ..................... 8,700 427,086 ---------- 961,042 ---------- HONG KONG-1.0% The Wharf (Holdings), Ltd. ................. 103,000 242,982 ---------- IRELAND-2.2% Allied Irish Banks Plc ..................... 16,300 216,111 Bank of Ireland ............................ 24,600 305,785 ---------- 521,896 ---------- ITALY-3.3% Eni S.p.A .................................. 49,300 782,419 ---------- JAPAN-13.2% Canon, Inc. ................................ 21,000 793,643 Honda Motor Co., Ltd. ...................... 23,900 969,040 Nissan Motor Co., Ltd. ..................... 114,000 789,388 Takefuji Corp. ............................. 7,900 549,009 ---------- 3,101,080 ---------- MEXICO-1.4% Cemex, SA de CV (ADR) ...................... 12,106 320,767 ---------- NETHERLANDS-4.3% DSM NV ..................................... 20,300 940,304 ING Groep NV ............................... 2,600 66,637 ---------- 1,006,941 ---------- SOUTH AFRICA-0.7% Sappi, Ltd. (ADR) .......................... 11,700 164,555 ---------- SOUTH KOREA-1.0% Kookmin Credit Card Co., Ltd. .................................... 7,000 245,262 ---------- SPAIN-4.1% Grupo Dragados, SA ......................... 21,700 386,104 Iberdrola, SA .............................. 40,400 587,408 ---------- 973,512 ---------- SWEDEN-6.0% Electrolux AB Cl.A ......................... 31,900 642,342 Nordea AB .................................. 53,700 291,458 Svenska Cellulosa AB Cl.B .................. 13,200 468,548 ---------- 1,402,348 ---------- TAIWAN-1.9% Compal Electronics, Inc. (GDR) ................................... 111,360 445,640 ---------- UNITED KINGDOM-18.4% British American Tobacco Plc ............... 39,300 422,427 Lloyds TSB Group Plc ....................... 31,900 317,596 Royal & Sun Alliance Insurance Group Plc ..................... 229,850 844,563 Royal Bank of Scotland Group ................................... 12,800 362,989 Safeway Plc ................................ 178,000 764,635 Six Continents ............................. 56,200 571,093 Vodafone Group Plc ......................... 487,000 668,254 Wolseley Plc ............................... 36,100 366,015 ---------- 4,317,572 ---------- Total Common Stocks (cost $20,446,930) ...................... 21,288,024 ---------- 2 Alliance Variable Products Series Fund ================================================================================ Principal Amount Company (000) U.S. $ Value -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT-8.9% TIME DEPOSIT-8.9% State Street Euro Dollar 1.25%, 7/01/02 (cost $2,100,000) .................... $2,100 $ 2,100,000 ----------- TOTAL INVESTMENTS-99.5% (cost $22,546,930) ................... 23,388,024 Other assets less liabilities-0.5% ..................... 105,860 ----------- NET ASSETS-100% ......................... $23,493,884 =========== -------------------------------------------------------------------------------- (a) Non-income producing security. Glossary of Terms: ADR - American Depositary Receipt GDR - Global Depositary Receipt See Notes to Financial Statements 3 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ ASSETS Investments in securities, at value (cost $22,546,930) ..... $ 23,388,024 Cash ....................................................... 246 Foreign cash, at value (cost $722,935) ..................... 723,355 Dividends and interest receivable .......................... 67,695 Receivable for variation margin on futures contracts ....... 26,426 ------------ Total assets ............................................... 24,205,746 ------------ LIABILITIES Payable for investment securities purchased ................ 683,301 Payable due to Adviser ..................................... 8,948 Accrued expenses ........................................... 19,613 ------------ Total liabilities .......................................... 711,862 ------------ NET ASSETS .................................................... $ 23,493,884 ============ COMPOSITION OF NET ASSETS Capital stock, at par ...................................... $ 2,184 Additional paid-in capital ................................. 22,513,694 Undistributed net investment income ........................ 170,071 Accumulated net realized loss on investments, futures contracts and foreign currency transactions ............................................. (7,091) Net unrealized appreciation of investments, futures contracts and foreign currency denominated assets and liabilities ....................... 815,026 ------------ $ 23,493,884 ============ Class A Shares Net assets ................................................. $ 11,757,798 ============ Shares of capital stock outstanding ........................ 1,092,038 ============ Net asset value per share .................................. $ 10.77 ============ Class B Shares Net assets ................................................. $ 11,736,086 ============ Shares of capital stock outstanding ........................ 1,091,470 ============ Net asset value per share .................................. $ 10.75 ============ -------------------------------------------------------------------------------- See Notes to Financial Statements. 4 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $25,273) ......... $ 239,451 Interest ..................................................... 7,289 --------- Total investment income ...................................... 246,740 --------- EXPENSES Advisory fee ................................................. 60,302 Distribution fee--Class B .................................... 6,687 Administrative ............................................... 34,500 Custodian .................................................... 27,331 Audit and legal .............................................. 20,091 Printing ..................................................... 11,403 Directors' fees .............................................. 2,172 Transfer agency .............................................. 474 Miscellaneous ................................................ 4,595 --------- Total expenses ............................................... 167,555 Less: expenses waived and reimbursed (see Note B) ............ (95,115) --------- Net expenses ................................................. 72,440 --------- Net investment income ........................................ 174,300 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain on investment transactions ................. 84,428 Net realized loss on futures contracts ....................... (52,123) Net realized loss on foreign currency transactions ........... (3,628) Net change in unrealized appreciation/depreciation of: Investments ................................................ 653,256 Futures .................................................... (31,097) Foreign currency denominated assets and liabilities ........ (5,523) --------- Net gain on investment and foreign currency transactions ..... 645,313 --------- NET INCREASE IN NET ASSETS FROM OPERATIONS ...................... $ 819,613 ========= -------------------------------------------------------------------------------- See Notes to Financial Statements. 5 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS Alliance Variable Products Series Fund ================================================================================
Six Months Ended May 10, 2001(a) June 30, 2002 to December 31, (unaudited) 2001 ================ ============== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income ............................ $ 174,300 $ 6,084 Net realized gain (loss) on investments, futures contracts and foreign currency transactions .... 28,677 (21,884) Net change in unrealized appreciation/depreciation of investments, futures contracts and foreign currency denominated assets and liabilities ................................ 616,636 198,390 ------------ ----------- Net increase in net assets from operations ....... 819,613 182,590 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income ............................ (24,197) -0- CAPITAL STOCK TRANSACTIONS Net increase ..................................... 16,956,695 5,559,183 ------------ ----------- Total increase ................................... 17,752,111 5,741,773 NET ASSETS Beginning of period .............................. 5,741,773 -0- ------------ ----------- End of period (including undistributed net investment income of $170,071 and $19,968, respectively) ......................... $ 23,493,884 $ 5,741,773 ============ ===========
-------------------------------------------------------------------------------- (a) Commencement of operations. See Notes to Financial Statements. 6 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2002 (unaudited) Alliance Variable Products Series Fund ================================================================================ NOTE A: Significant Accounting Policies The AllianceBernstein International 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 May 10, 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. 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 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 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 amortizes premiums and accretes discounts as adjustments to interest income. Investment gains and losses are determined on the identified cost basis. 7 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ 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 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 1% 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 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. Effective May 1, 2002, 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% and 1.45% of the average daily net assets for Class A and Class B shares, respectively. 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 $60,615. Brokerage commissions paid on investment transactions for the six months ended June 30, 2002, amounted to $26,724, of which $1,420 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 $474 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. 8 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 ........................... $16,519,666 U.S. government and agencies .......................... -0- Sales: Stocks and debt obligations ........................... $ 867,714 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. Gross unrealized appreciation and unrealized depreciation are as follows: Gross unrealized appreciation ......................... $ 1,448,641 Gross unrealized depreciation ......................... (607,547) ----------- Net unrealized appreciation ........................... $ 841,094 =========== 1. Financial Futures Contracts The Portfolio may buy or sell financial futures contracts for the purpose of hedging its portfolio against adverse affects of anticipated movements in the market. The Portfolio bears the market risk that arises from changes in the value of these financial instruments. At the time the Portfolio enters into a futures contract, the Portfolio deposits and maintains as collateral an initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed. At June 30, 2002, the Portfolio had outstanding futures contracts as follows:
Value at Number of Expiration Original June 30, Unrealized Type Contracts Position Month Value 2002 Depreciation ==== ========= ======== ===== ===== ==== ============ EURO STOXX 50 14 Long Sept 2002 $441,898 $435,663 $ 6,235 GBP FTSE 100 IDX 4 Long Sept 2002 $294,273 $283,763 $10,510 JPY TOPIX INDX 2 Long Sept 2002 $174,861 $170,108 $ 4,753 ------- $21,498 =======
A portion of the foreign cash included in the statement of assets and liabilities has been segregated as collateral for the futures transactions outstanding at June 30, 2002. 2. 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 9 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ amount, in U.S. dollars, reflects the total exposure the Portfolio has in that particular currency contract. At June 30, 2002, the Portfolio had no outstanding forward exchange currency contracts. 3. 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. The Portfolio had no transactions in options written for the six months ended June 30, 2002. -------------------------------------------------------------------------------- NOTE E: Distributions to Shareholders As of December 31, 2001, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income .......................... $ 22,685 --------- Accumulated earnings ................................... 22,685 Accumulated capital and other losses ................... (6,834)(a) Unrealized appreciation/(depreciation) ................. 166,739 (b) --------- Total accumulated earnings/(deficit) ................... $ 182,590 ========= -------------------------------------------------------------------------------- (a) On December 31, 2001, the Portfolio had a net capital loss carryforward of $4,117 which will expire on December 31, 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 period ended December 31, 2001, the Portfolio deferred to January 1, 2002, post October currency losses of $2,717. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. 10 Alliance Variable Products Series Fund ================================================================================ NOTE F: Capital Stock There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows:
----------------------------------- ----------------------------------- SHARES AMOUNT ----------------------------------- ----------------------------------- Six Months Ended May 10, 2001 (a) Six Months Ended May 10, 2001 (a) June 30, 2002 December 31, June 30, 2002 December 31, (unaudited) 2001 (unaudited) 2001 ============== ============== ============== ============== Class A Shares sold....................... 805,602 534,207 $ 8,417,698 $ 5,054,653 Shares issued in reinvestment of dividends................... 1,136 -0- 12,481 -0- Shares redeemed................... (111,026) (137,881) (1,116,124) (1,246,108) -------------- -------------- -------------- -------------- Net increase...................... 695,712 396,326 $ 7,314,055 $ 3,808,545 ============== ============== ============== ============== Six Months Ended August 15, 2001(b) Six Months Ended August 15, 2001(b) June 30, 2002 to December 31, June 30, 2002 to December 31, (unaudited) 2001 (unaudited) 2001 ============== ============== ============== ============== Class B Shares sold....................... 1,001,686 188,151 $ 10,683,493 $ 1,778,002 Shares issued in reinvestment of dividends................... 1,068 -0- 11,716 -0- Shares redeemed................... (96,559) (2,876) (1,052,569) (27,364) -------------- -------------- -------------- -------------- Net increase...................... 906,195 185,275 $ 9,642,640 $ 1,750,638 ============== ============== ============== ==============
-------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- (a) Commencement of operations. (b) Commencement of distribution. 11 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO FINANCIAL HIGHLIGHTS Alliance Variable Products Series Fund ================================================================================ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
------------------------------- ------------------------------ Class A Class B ------------------------------- ------------------------------ Six Months May 10, Six Months August 15, Ended 2001(a) to Ended 2001(b) to June 30, 2002 December 31, June 30, 2002 December 31, (unaudited) 2001 (unaudited) 2001 ============= ============ ============= ============ Net asset value, beginning of period ...... $ 9.87 $ 10.00 $ 9.87 $ 10.25 ---------- ---------- ---------- ---------- Income From Investment Operations Net investment income (c)(d) .............. .18 .04 .19 .01 Net realized and unrealized gain (loss) on investment transactions ................ .73 (.17) .70 (.39) ---------- ---------- ---------- ---------- Net increase (decrease) in net asset value from operations ........................ .91 (.13) .89 (.38) ---------- ---------- ---------- ---------- Less: Dividends and Distributions Dividends from net investment income ...... (.01) -0- (.01) -0- ---------- ---------- ---------- ---------- Total dividends ........................... (.01) -0- (.01) -0- ---------- ---------- ---------- ---------- Net asset value, end of period ............ $ 10.77 $ 9.87 $ 10.75 $ 9.87 ========== ========== ========== ========== Total Return Total investment return based on net asset value (e) .................... 9.26% (1.30)% 9.04% (3.71)% Ratios/Supplemental Data Net assets, end of period (000's omitted) . $ 11,758 $ 3,913 $ 11,736 $ 1,828 Ratio to average net assets of: Expenses, net of waivers and reimbursements (f) ..................... 1.06% .95% 1.34% 1.20% Expenses, before waivers and reimbursements (f) ..................... 2.67% 8.41% 2.81% 9.31% Net investment income (d)(f) .............. 2.81% .59% 2.89% .17% Portfolio turnover rate ................... 7% 22% 7% 22%
-------------------------------------------------------------------------------- (a) Commencement of operations. (b) Commencement of distribution. (c) Based on average shares outstanding. (d) Net of expenses reimbursed or waived by the Adviser. (e) 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. (f) Annualized. 12 ALLIANCEBERNSTEIN INTERNATIONAL VALUE 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. 13